Bank of India posts Rs 4,738 crore loss as IL&FS adds to provisions

Bank of India (BoI) on Monday reported one of its highest quarterly losses of  Rs 4,737.56 crore in the third quarter ended December 31, 2018, driven by accelerated provisioning on its stressed accounts, including fresh hit due to exposure to IL&FS. 

The loss in the year-ago period was Rs 2,341.20 crore. Its provisions for bad loans rose to Rs 9,179.48 crore in the December quarter, up from Rs 4,373.06 crore a year ago. 

The bank has Rs 3,500 crore exposure to IL&FS Group. 

“Going ahead, the main area of focus will be to reduce bad loans and get back to a profit in the January-March quarter,” said Dinabandhu Mohapatra, CEO, at a post-earnings press conference, adding the bank expected Rs 2,600 crore to be recovered from bankruptcy cases in the current quarter.

The bank has also been referring all its stressed accounts of Rs 1 crore and above where the provisioning is 50% to National Company Law Tribunal (NCLT) and also increasing the provisioning on all the large accounts which are in the NCLT. This has raised the total provisioning cover of the bank to 76.76%.

BoI said its profit was affected by additional provisions for certain NPA accounts. This includes 100% provisions of Rs 4,335 crore and Rs 2,604 crore, respectively, for the two lists of NPAs that Reserve Bank of India had asked banks to refer to NCLT. Total income rose to Rs 11,839.53 crore at the end of the third quarter, as against Rs 10,376.03 crore a year ago. The bank improved its asset quality, trimming its net non-performing assets (NPAs) to 5.87% of the net advances as on December 31, 2018, as against 10.29% by the end of December 2017. 

Gross NPAs came from from Rs 62,328 crore in March 2018 and to Rs 60,797 crore in December 2018 as the bank wrote off bad loans and auctioned others besides strong recoveries.

The bank’s operating profit increased 68% from Rs 1,354 crore in December 2017 to Rs 2,273 crore in December 2018 bolstered by both rise and net interest income (NII) and non-income interest income. Net interest income of the bank rose 33.23% to Rs 3,332 crore while the non-interest income increased by 60.25% to Rs 1,688 crore.

There has also been a marked improvement in recovery in the written-off account, which went up sharply to Rs 262 crore.

CLEAN-UP ACT

• BoI’s total income rose to Rs 11,839.53 crore in Q3, as against Rs 10,376.03 crore in the same period a year ago
   
• The bank trimmed its net  non-performing assets to 5.87& of gross advances